Artha India Ventures, a Mumbai-based seed-stage investor, plans to double its portfolio to 100 start-ups in three years, managing partner Anirudh Damani has said.
The firm, having backed 51 start-ups till date—including mobility start-up One Way Cab, peer-to-peer lending platform LenDen Club and US-based credit score app Tala—is in talks with at least four early-stage companies, Damani added. It plans to invest $25,000-50,000 in each and close the deals within two-three months.
These include a Delhi-based virtual reality start-up, a company developing autonomous hardware for the real estate sector, and a US-based firm creating a blockchain-based funds transfer system, Damani said in an interview. He declined to name the firms.
Artha India Ventures represents a new class of investors, called micro VCs, investing small amounts and being among the first backers to start-ups. Artha invests up to Rs50 lakh in each venture and supports these companies for up to two more rounds. So far, it has invested about $1.2 million across all its investments.
“Our strategy has been to cash in early and work closely with entrepreneurs, try to get involved in building the product and connect them to people in our network for the next level of growth,” Damani said.
Over the last few years, the maturing Indian start-ups ecosystem has seen several professionals turn angel investors. The list includes Tata Sons chairman emeritus Ratan Tata, Paytm founder Vijay Shekhar Sharma, Google India managing director Rajan Anandan and former Snapdeal products head Anand Chandrasekaran, while some others have put their money in established VC firms.
“We do intensive level of KPM (Key Performance Metrics) monitoring, get involved in the hiring processes and setting up the systems right from the start; this gives us a lot of information about the company and helps in due diligence,” Damani said.
He explained the start-ups he works with are typically teams of 10 members or less and have just passed the proof-of-concept stage. At this point, the bet is on entrepreneurs and not so much on the business idea because the start-ups are likely to pivot.
“It is very common for early stage start-ups to pivot because what they have is a plan on paper,” Damani said. “When you go to the market is only when you understand what is really going to work.”
A case in point is ConfirmTKT, a fare prediction engine for trains it backed in September last year. “We are working with ConfirmTKT to make it into a multimodal travel start-up that basically does meta-search,” Damani said.
A fourth-generation entrepreneur, Damani started investing in start-ups in his personal capacity in 2012 along with member of his family Ashok Kumar Damani, Ramesh Damani and Animesh Damani.
In 2014, he moved all the investments to Artha India Ventures–under the legal entity Artha Energy Projects Pvt. Ltd–that is supported by his family office K. Damani Group, a diversified group engaged in logistics and shipping, commodities trading and renewable energy business.
Artha Energy Projects, incorporated in October 2013, has a unique model wherein it backs early stage ventures and invests the returns from investments in renewable energy assets, and vice versa– that gives it small but constant supply of capital.
Damani said Artha India has invested over $1 million in wind farms—two of which are in Rajasthan and one in Maharashtra, totaling 2.5 MW. “Our wind assets get us 15-17% IRR (internal rate of return) on an annual basis,” he said.
The VC firm has exited at least four of its portfolio firms till date, including OYO (Oravel Stays Pvt. Ltd), which did a buck-back of shares in July 2016, Damani said. Artha was also an early investor in Bookmycab which was acquired by Wings Travels in March 2016.
Going forward, Damani said he expects exits from two of his portfolio start-ups and another two will raise follow-on rounds in the current financial year ending March 2018.